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3 Really Stupid Things that Really Smart People Do With their Money

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In between eating from his box of chocolate and regaling bystanders with tales of magic shoes and war heroics, Forrest Gump sagely reminded us that “stupid is as stupid does.” You tell ‘em Forrest. You tell the world!

However, we all know people (and alas, sometimes we might be such people) who are highly educated and experienced, and yet do remarkably stupid things with their money. We’re not talking minor gaffes or small blunders. We’re talking stupid to the point that Forrest Gump would be so horrified, he would feel compelled to move to another bus stop. 

So, what are some of these heedless, reckless and foolish things? Behold this terrifying list:

1. They listen to their self-appointed “financial guru” of a neighbour, in-law, colleague, stranger in a coffee shop, and so on.

As long as we’re reflecting on well-known idioms, here’s another one that you’re probably familiar with: “even a broken clock is right twice a day.” Well, unfortunately, an ignorant and arrogant so-called “financial guru” usually isn’t even right once a day. Heck, they’re probably not right once a month. It’s (probably) fine to listen to their advice. But never, ever act on it without doing your own research and speaking with experts; especially when it comes to hair-brained tax-saving schemes and seemingly too-good-to-be-true investments.

2. They try — and invariably fail — to keep up with the Joneses.

Ah, the Jonses. They’re the folks who always seem to have the best of everything. You go to Myrtle Beach and stay in a Motel 6 (“they’ll keep the light on for you”), while the Joneses go on one of those glorious cruise tours that they advertise on PBS. You buy a new minivan, and the Joneses buy a luxury SUV to haul their boat. The moral to this story? If the Joneses are doing well and buying nice stuff, then good for them. But if you try and wage a spending cold war against them, then you’re going to hit the wall sooner or later — and it won’t be pretty. Truly smart people focus on their own needs and wants, and avoid comparing themselves to others who seem to have the best of everything (and hey, if it makes you feel better, the Joneses are probably pretty dysfunctional and haven’t sat down for a family meal in years).

3. They open a business with zero understanding of financial management.

Who doesn’t dream of being their own boss, and showcasing their business far and wide with banners, LED message centers, channel letters, and other products from the Landmark Sign Company? Well, for a surprising number of smart people see that dream turn into a nightmare, because they have no clue — zero, zilch, nada — about what must change for them when they transition from being a salaried employee to a full-fledged business owner. Without expert help in this area, the road to the Fortune 500 (or at least the Inc. 5000) is likely to end up in a shut down, sell off, or bankruptcy filing.

The Bottom Line

Here’s another passenger on the wise saying bus: “a fool and his money are soon parted.” Sadly, many smart people don’t realize how foolish they are with their money until they lose it. Hopefully, this article is reaching you just in time (not for you of course, but for a friend…yeah…er…a friend).

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